MKT/421
[], 2013
ROBERT MC GEARY
In this paper, the marketing mix of Starbucks has been discussed. The components of marketing mix include product, price, place, and promotion. Starbucks was founded in the year 1971 in Seattle. The company was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker (Bussing-Burks, 2009, p. 9). The company was developed with the vision of educating customers about fine coffee. Starbucks was taken over by Howard Schultz in the year 1987. The plan of Schultz was to recreate the experience of customers regarding coffee. Schultz recreated the Italian espresso bar experience in the United States by making a personal relationship between customers and coffee (Bussing-Burks, 2009, p. 19). As the time passed, Starbucks grew from a small and regional business to an undisputed leader in the coffee industry. The vision of Starbucks is to inspire and nurture the human spirit. After its establishment, the growth of the company has been going up.
The consumption of coffee in the United States has been increasing since 1960s. Ever since its foundation, Starbucks has been selective and cautious in selecting its target market. The target market of Starbucks consists of buyers with similar needs and demands. The price of Starbucks’ products is set according to the target market. The target market of Starbucks consists of office workers with middle income to high income, the customers who have the desire to purchase premium products. Schultz wanted to develop Starbucks into a place, which is considered to be a third place in addition to home and office, a place where people can gather, relax, and interact with one another. Schmitt indicated the following: «Starbucks’s staggering success is due in large part to its skill at creating, standardizing, and implementing an upscale third-place ambiance on a global scale» (as cited in Thompson, & Arsel, 2004, p. 633). Starbucks is vigilant about the quality of their products and to meet the expectations of customers. Starbucks has successfully achieved this goal by providing a unique atmosphere to the customers. The customers do not only visit Starbucks because of its products but also because of the superior level of service offered by the business.
The target market of Starbucks can be divided into three types including undifferentiated, differentiated, and concentrated. The concentrated marketing is also known as niche marketing. In this type of marketing, the efforts are directed towards single market segments. In this type of marketing strategy, exclusive strategies are developed for each segment. Differentiated marketing is another marketing approach where separate products are developed and separate marketing programs are developed for each segment. In undifferentiated marketing, the firm ignores differences and targets the whole market with the same strategy. When Starbucks launched its products, it utilized undifferentiated marketing strategy. With the passage of time, they created and maintained the marketing mix with separate strategies for each segment. The challenge with this approach was developing brands, which satisfy all customers.
After deciding the target market, the next step is to identify the positioning strategy according to the target market. The positioning of the product defines how customers perceive a product. The positioning of a product is based on its price, quality, class, and other characteristics. Starbucks believe in relationship marketing according to Michelli (2007):
Simply creating a welcoming environment and knowing a customer’s name will help to create a lasting relationship between a business and its customers. Learning a customer’s wants and desires and then responding to them, also helps create a stronger company-client bond.
Starbucks position itself as a premium product in the coffee industry. The company achieves this goal by creating high standard and innovative products. The company provides excellent service to its customers. Schultz believes that coffee is a perishable product; therefore, the company gives importance to every stage of coffee production.
The products of Starbucks include coffee and related beverages. The company specializes in selling coffee, espresso, cold beverages, blended beverages, and others. The company also offers a selection of premium teas to the customers. Starbucks also specializes in selling coffee-related accessories (Enz, 2009, p. 569).
According to Schultz and Gordon (2011), the Starbucks has positioned itself as a premium product in the coffee industry (p. 288). The products of Starbucks are of high standard. Starbucks offers innovative products and provides excellent customer service. Schultz was well-aware of how to provide high quality coffee. The company purchases bought-dark roast coffee beans from Kenya, Ethiopia, and Costa Rica. The coffee beans are roasted in their own plants. The products of Starbucks are only sold through company-owned stores. The company uses Total Quality Management to ensure the quality of its products. Starbucks uses nonfat milk and introduced Frappuccino. The company also offers seasonal products such as Strawberry and cream Frappuccino in the summer. Similarly, gingerbread latte is offered in Christmas. Starbucks also offers cookies, pastries, salads, and sandwiches. Starbucks is cautious about the quality of its products and ensures the premium quality of products is maintained.
Price of a product can be defined as the amount of money a buyer gives to the seller for a specific quantity of product. Customers perceive price as the indicator of product quality. The price of a product, along with its quality, determines the value of the product. When Starbucks started its operations, its products were expensive. Therefore, the positioning of Starbucks was according to the price.
In the year 2010, Starbucks increased the prices of its products because of an increase in the prices of coffee beans, dairy, and others. The global recession and the turbulent global economy have increased the pressure on businesses to lower the prices of their products. Therefore, Starbucks is striving to lower the prices of its most popular products including beverages and others. The pricing of Starbucks’ products is premium because of the commitment of Starbucks towards high quality and customer service.
The distribution channels links the products and services of an organization to its customers. It is important for Starbucks to maintain the relationship with customers. From the distribution point of view, Starbucks has the competitive advantage over its competitors because of its winning store locations. Starbucks always select highly visible locations and its stores are opened as clusters. The purpose of introducing store clusters is to cater to the needs and demands of a large number of customers. When the demand of products is increased, the cluster of businesses helps in fulfilling the needs of customers. The baristas working at Starbucks play a vital role in engaging customers. The company provides extensive training to its staff. Starbucks selects highly visible locations for its businesses. The outlets of Starbucks are located at hubs of cities or nearby markets.
The marketing activities of Starbucks aim to stimulate the sales of its products. One of the most significant marketing activities of Starbucks includes organizing community events before the opening of store. The company also offers mugs and T-shirts for the purpose of marketing. Starbucks recruit local ambassadors from different areas of the world. Starbucks has introduced its community website for gathering feedback of customers. The Starbucks reward program is also its promotion strategy through which members earn a free drink after every fifteen purchase. Starbucks keeps quality over prices.
Starbucks, like every retailer, supports its strategy with its retail mix. The advertising and promotion budget of Starbucks is minimal. The stores of Starbucks play a vital role in satisfying and attracting customers. The stores are spacious enough to cater to a large number of customers. Customer service and personal selling is done by trained staff.
Starbucks believe that the company is not in the coffee business but in the people business. The company claims its leadership by focusing on the development of new products and continuous improvements of existing products. The company also believes in developing a strong connection between customers and the company. The company never compromises on product quality and ensures the maintenance of high level of service standards. The marketing mix of Starbucks reveals that the company has set inspirations for other companies operating in the same market. The high level of product quality coupled with excellent customer service and unique store experience are key factors, which have resulted in the success of Starbucks. The successful strategies of Starbucks have not only allowed the business to achieve success in the United States but also in the international market.
References
Bussing-Burks, M. (2009). Starbucks. Santa Barbara, California: ABC-CLIO. Retrieved from
http://books.google.com/books?id=YQPRsVOpBgwC&dq=Starbucks+was
+founded+in+the+year+1971+in+Seattle.+The+company+was+founded
+by+Jerry+Baldwin,+Zev+Siegl,+and+Gordon+Bowker.&source=gbs_
navlinks_s
Enz, C. A. (2009). Hospitality strategic management concepts and cases. Hoboken,
N.J.: John Wiley & Sons. Retrieved from
http://books.google.com/books?id=x77o93fmiKQC&dq=Starbucks+also
+specializes+in+selling+coffee-related+accessories&source=gbs_navlinks_s
Schultz, H., & Gordon, J. (2011). Onward: how Starbucks fought for its life without
losing its soul. New York, NY: Rodale. Retrieved from
http://books.google.com/books?
id=Dn8xXyvDlSwC&dq=starbucks&lr=&source=gbs_navlinks_s
Michelli, J. A. (2007). The Starbucks experience: 5 principles for turning ordinary
into extraordinary. New York: McGraw-Hill. Abstract retrieved from
http://skyig.com/pdf/The_Starbucks_Experience.pdf
Thompson, C., & Arsel, Z. (2004). The Starbucks Brandscape And
Consumers’ (Anticorporate) Experiences Of Glocalization. Journal of
Consumer Research, 31(3), 631-642. Retrieved from
http://www.jstor.org/stable/10.1086/425098
